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					PART A: PRELIMINARY......................................................................................................1

         FOREWORD ...............................................................................................................1

         APPLICABILITY...........................................................................................................2

         LEGAL PROVISION....................................................................................................2

         INTERPRETATION......................................................................................................2

         ISLAMIC BANKING CONCEPTS..............................................................................3


PART B: POLICY REQUIREMENTS.................................................................................7

         PRE-REQUIREMENTS ..............................................................................................7

         POST-REQUIREMENTS............................................................................................8

         SOURCES OF FUNDS OF SPI LICENSED INSTITUTIONS ............................. 15

         INVESTMENT ACTIVITIES OF SPI LICENSED INSTITUTIONS........................ 15

         ACCOUNTING, FINANCIAL DISCLOSURES AND REPORTING..................... 16

         SYSTEM AND CLEARING NETWORK OF SPI LICENSED INSTITUTIONS... 16

         APPENDIX I: SCOPE OF BUSINESS ACTIVITIES OF THE SPI LICENSED
                                INSTITUTIONS................................................................................ 19

         APPENDIX II: LIST OF SUPERSEDED GUIDELINES/ CIRCULARS............. 22

         APPENDIX III: REALLOCATION OF CAPITAL ................................................... 23

         APPENDIX IV: ISLAMIC BANKING LOGO ........................................................... 24
                          Islamic Banking and         Guidelines on Skim Perbankan            Page
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                          Takaful Department          Islam                                   1/23


PART A: PRELIMINARY

FOREWORD


1.1     Skim Perbankan Islam (SPI) 1 is an Islamic banking initiative introduced by Bank
         Negara Malaysia in March 1993 with the objective of disseminating and promoting
         Islamic banking on a wider scope by allowing licensed institutions under the
         Banking and Financial institutions Act 1989 (BAFIA) to offer Islamic banking
         services using their existing infrastructures and brand name.

1.2     The purpose of the Guidelines is to facilitate the participation of licensed institutions
         in the SPI, through a set of standard and comprehensive guidelines to assist the
         licensed institutions in carrying out their SPI operations in a systematic way; and to
         ensure that the SPI operations undertaken by the licensed institutions would be fully
         Shariah compliant. Bank Negara Malaysia may, from time to time, amend the
         Guidelines.

1.3     The scope of the Islamic banking business of the SPI commercial banks is
         restricted to their commercial banking licence under the BAFIA. For the SPI
         investment banks, the scope of the Islamic banking business shall encompass the
         scope of business of the merchant banking licence under the BAFIA. Please refer
         to Appendix I for the details of the business activities of the SPI licensed
         institutions.

1.4      Investment banks that undertake only fee-based activities, for example, lead
         arranger for sukuk are exempted from the Guidelines.

1.5     To participate in the SPI, a licensed institution is required to submit an application
         to Bank Negara Malaysia and it shall be forwarded to:
                 Pengarah
                 Jabatan Perbankan Islam dan Takaful
                 Bank Negara Malaysia
                 Jalan Dato’ Onn
                 50480 Kuala Lumpur

1   The term “Skim Perbankan Tanpa Faedah (SPTF)” was changed to “Skim Perbankan Islam (SPI)” as per the
    circular issued by Bank Negara Malaysia on “Langkah-langkah Pengukuhan Perbankan Islam” dated 12
    November 1998.
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                      Takaful Department       Islam                               2/23




APPLICABILITY


2.1   The Guidelines are applicable to all licensed institutions under the BAFIA that
      participate in the SPI.


LEGAL PROVISION


3.1   The Guidelines are issued pursuant to Section 124 and Section 126 of the BAFIA.


3.2   With the coming into force of the Guidelines, the relevant guidelines and circulars as
      listed in Appendix II will be superseded.


INTERPRETATION


4.1   The following terms, as used in these guidelines shall have the following meanings,
      unless the context otherwise requires:


      “branch” means the branches of commercial banks or investment banks that
      participate in the SPI;


      “IBD” means the Islamic banking division set up at the head office, main office or
      central office of the banks to administer, manage and conduct all matters pertaining
      to the SPI;


      “IBF” means the Islamic banking fund set up by the banks to fund the operations of
      SPI;


      “SPI” means the Islamic banking scheme provided by licensed institutions to
      conduct banking business based on Islamic principles;


      “SPI licensed institutions” mean the commercial banks and the investment banks
      that participate in the SPI.
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                      Takaful Department       Islam                                 3/23



ISLAMIC BANKING CONCEPTS


5.1   Bai’ Bithaman Ajil (deferred payment sale)
      Refers to the sale of goods on a deferred payment basis at a price which includes a
      profit margin agreed to by both parties.


5.2   Bai’ Dayn (debt-trading)
      Refers to sales or purchase of debt evidenced by trade document and papers which
      generated from Shariah compliant business activities.


5.3   Bai’ Inah (sell and buy back)
      Refers to contract of sale and purchase of an asset whereby the seller sells to buyer
      in cash and subsequently buys back the asset at a marked up deferred price.


5.4   Bai’ Istijrar (supply contract)
      Refers to an agreement between the client and the supplier, whereby the supplier
      agrees to supply a particular product on an ongoing basis, for example monthly, at
      an agreed price and on the basis of an agreed mode of payment.


5.5   Bai’ salam (future delivery)
      Refers to the purchase of a commodity for deferred delivery in exchange for
      immediate payment. It is a type of sale in which the price, known as the Salam
      capital, is paid at the time of contracting while the delivery of the item to be sold is
      deferred.


5.6   Hibah (gift)
      Refers to gifts awarded voluntarily.


5.7   Hiwalah (transfer of debt)
      Refers to transfer of debt from transferor to the payer.
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                       Takaful Department       Islam                                 4/23



5.8    Ijarah (leasing)
       Refers to an arrangement under which the lessor leases equipment, building or
       other facility to a client at an agreed rental against a fixed charge, as agreed by both
       parties.


5.9    Ijarah Muntahia Bittamleek
       Refers to a leasing contract which includes a promise by the lessor to transfer the
       ownership in the leased property to the lessee, either at the end of the term of the
       Ijarah period or by stages during the term of the contract.


5.10   Ijarah Thumma al-Bai’ (leasing and subsequent purchase)
       Refers to a leasing which subsequently followed by a sale contract whereby the hirer
       leases the goods from the owner at an agreed rental over a specified period. Upon
       expiry of the leasing period, the hirer enters into a second contract to purchase the
       goods from the owner at an agreed price. This concept is applicable for financing of
       consumer goods and durables.


5.11   Kafalah (guarantee)
       Refers to a contract of guarantee in which one party guarantees the fulfilment of a
       claim or performance of an obligation which is due to another party in a case of
       default.


5.12   Mudharabah (profit –sharing)
       Refers to an agreement made between a party, who provides the capital and
       another party (entrepreneur), to enable the entrepreneur to carry out business
       projects, which will be on a profit-sharing basis, according to pre-determined ratios
       agreed upon earlier. In the SPI, the agreement could be between a depositor and
       the SPI (as the entrepreneur) or between the SPI (as the provider of capital) and an
       entrepreneur. In the case of losses, the losses are borne by the provider of the
       funds.
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                        Takaful Department      Islam                                5/23



5.13   Murabahah (cost-plus)
       Refers to the sale of goods at a price which includes a profit margin as agreed to by
       both parties. Such a sales contract is valid on condition that the price, other costs
       and the profit margin of the seller are stated at the time of the agreement of sale.


5.14   Musyarakah (joint venture)
       Refers to a partnership or joint venture for a specific business with a profit motive,
       whereby the distribution of profits will be apportioned according to an agreed ratio.
       In the event of losses, both parties will share the losses on the basis of their equity
       participation.


5.15   Musyarakah Mutanaqisah (diminishing partnership)
       Refers to a form of partnership in which one of the partners promise to buy the
       equity share of the other partner gradually until the title to the asset is completely
       transferred to him.


5.16   Qard (loan)
       Refers to an interest-free loan. The borrower is only required to repay the principal
       amount borrowed, but he may pay an extra amount at his absolute discretion, as a
       token of appreciation.


5.17   Rahnu (collateralized borrowing)
       Refers to an arrangement whereby a valuable asset is placed as collateral for a
       debt. The collateral may be disposed in the event of default.


5.18   Sarf (foreign exchange)
       Refers to the buying and selling of foreign currencies.
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                       Takaful Department      Islam                                6/23



5.19   Tawarruq (tripartite sale)
       Refers to an arrangement that involves a purchase of an asset based on
       musawamah or murabahah and a subsequent sale of the same asset to a third
       party in order to gain cash money.


5.20   Ujr (fee)
       Refers to commissions or fees charged for services.


5.21   Wadiah (safe keeping)
       Refers to safe keeping contract whereby the depository guarantees payment of the
       whole amount of deposits, or any part thereof, outstanding in the account of the
       depositors, when demanded. The depositors are not entitles to any share of the
       profits (generated from usage of the deposit by depository) but the depository may
       provide returns to the depositors as a token of appreciation.


5.22   Wakalah (nominating another person to act)
       A situation, where a person nominates another person to act on his behalf.


5.23   Wakalah Bil Istithmar
       Refers to an “investment agency” contract where the investor (the principal) appoints
       the bank (the agent) to undertake investment activities on behalf of the principal for
       a fee. The bank acts in two capacities – as agent in accepting deposits from the
       participant who plans to invest, and as investment manager in carrying out Shariah-
       compliant investment activities as agreed by the parties. The bank as an agent
       cannot guarantee the profit expected from the investment
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                           Takaful Department        Islam                                 7/23



PART B: POLICY REQUIREMENTS

PRE-REQUIREMENTS


6.1       Minimum Requirements
          The licensed institution is required to comply with the minimum requirements as
          stipulated by Bank Negara Malaysia before they are allowed to participate in the
          SPI. The requirements are as follows:
          (i)     the licensed institution is financially sound;

          (ii)    there are no major adverse inspection findings against the licensed
                  institution;

          (iii)   it complies with all statutory requirements and provisions of law, as well as
                  guidelines issued by Bank Negara Malaysia from time to time;

          (iv)    it complies with the minimum risk-weighted capital ratio (RWCR) of 8%;

          (v)     it complies with the minimum capital requirements:
                  (a)     locally incorporated foreign banks: RM300 million
                  (b)     domestic commercial banks: RM2 billion as a group2
                  (c)     investment banks: RM500 million individually or RM2 billion as a
                          group

          (vi)    it complies with the lending guidelines.


6.2       Application
          The licensed institution is required to submit an application to participate in the SPI
          to Bank Negara Malaysia, outlining the following:
          (i)     Purpose of the participation;

          (ii)    Products to be offered under the SPI and its structure;

          (iii)   Investment avenues;


2     The aggregated amount held by the commercial bank and investment bank in the group. Gazetted
      on 7 February 2001 and came into force on 31 December 2001
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                             Takaful Department            Islam                                        8/23



         (iv)     Method of segregating the funds of SPI from the funds of conventional
                  banking;

         (v)      Identification of branches where the SPI is to be conducted;

         (vi)     Infrastructure and logistic requirements, including manpower and training
                  programmes; and

         (vii)    Financial disclosure.


POST-REQUIREMENTS


7.1      Islamic Banking Division 3
         (i)      Once the application to participate in the SPI has been approved by Bank
                  Negara Malaysia, the licensed institution is required to set up an Islamic
                  Banking Division (IBD) at the head office.


         (ii)     The IBD shall be responsible to prepare a business plan for the SPI
                  operations in terms of operationalising the SPI, as well as to develop
                  policies and procedures pertaining to the SPI operations. This includes
                  system and product development, marketing, processing, approving limits,
                  branch supervision, business development and credit control.


         (iii)    The SPI licensed institutions must ensure that the IBD is provided with the
                  necessary support by the other divisions/ departments to ensure smooth
                  implementation of Islamic banking operations, particularly in areas where
                  similar infrastructure is shared. The SPI licensed institutions must also
                  ensure that the IBD is provided with the level of resources that
                  commensurate with the expected cost and profitability of the IBD.




3   Effective 2 January 1999, the SPI licensed institutions were required to upgrade the Islamic Banking Unit (IBU)
    to Islamic Banking Division (IBD) as per the circular issued by Bank Negara Malaysia on “Langkah-langkah
    Pengukuhan Perbankan Islam” dated 12 November 1998.
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                      Takaful Department       Islam                                9/23



      (iv)    The IBD must ensure that the submission of statistical report to Bank Negara
              Malaysia is complete, accurate and timely. They are also required to ensure
              that the accounting standards, legal and regulatory requirements, directives
              and guidelines issued by Bank Negara Malaysia and other authorities, and
              other rules and regulations issued by the relevant banking associations are
              fully observed at all time.


      (v)     The IBD is required to establish suitable criteria to ensure the staffs manning
              the Islamic banking operations are proficient, qualified, and knowledgeable
              as well as committed in the discharge of their duties and responsibilities.
              Continuing training and education programme should be provided to enable
              staff of the SPI licensed institution to enrich their knowledge, understand and
              appreciate the virtues of Islamic banking as well as to keep them abreast
              with the latest development relating to Islamic banking.


      (vi)    The IBD shall be headed by a Muslim senior management officer of the SPI
              licensed institution, at least the level of the Assistant General Manager
              (AGM). The position of the AGM should be equivalent to the status of other
              key functional heads to enable him to deal effectively with his peers and
              superiors when discharging his duties and responsibilities. The AGM should
              possess relevant background on Islamic banking and sufficient banking
              experience to enable him to perform his duties and responsibilities with
              regard to Islamic banking effectively.


      (vii)   The IBD must adhere to other roles and responsibilities as determined by
              the licensed institutions or Bank Negara Malaysia from time to time.
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                       Takaful Department      Islam                              10/23



7.2   Islamic Banking Fund
      (i)     The SPI licensed institutions are required to maintain an Islamic Banking
              Fund (IBF), with the minimum of:
              (a)    RM20 million for commercial banks; and
              (b)    RM6 million for investment banks.


              The minimum amount is subject to change by Bank Negara Malaysia from
              time to time.


      (ii)    The IBF should be funded by way of an allocation by head office of the
              licensed institution and to be placed under the IBD to fund the operations of
              the SPI. The IBF should be utilised for overhead expenses and matters
              relating to the operations of SPI, while income earned from the SPI
              operations shall be credited into the IBF.


      (iii)   The IBF must be clearly segregated from the capital designated for
              conventional banking operations and cannot be reallocated to the
              conventional banking operations.


7.3   Capital Adequacy 4
      (i)     The SPI licensed institutions are required to observe a minimum capital
              adequacy requirement on their Islamic banking portfolios in addition to the
              existing compliance on a consolidated basis, through separate compliance
              requirement for the Islamic banking portfolio that involve a reallocation of
              current capital funds into the IBF.


      (ii)    The SPI licensed institutions are required to observe a minimum core capital
              ratio (CCR) of 4% and a minimum RWCR of 8% for their Islamic banking
              portfolios subject to a minimum IBF or whichever is higher. In addition, SPI
              licensed institutions are required to have a separate disclosure on the CCR
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                             Takaful Department             Islam                                        11/23



                  and RWCR of their Islamic banking portfolios in their financial statements in
                  addition to the consolidated CCR and RWCR. Please refer to Appendix III
                  for the illustration of the reallocation of capital.


         (iii)    The SPI licensed institutions are required to observe the reporting
                  requirements on CAR for their Islamic banking portfolios under the Bank
                  Negara Malaysia’s Guidelines on Risk Weighted Capital Adequacy
                  Framework: Standardised Approach for Credit Risk and Basic Indicator,
                  Standardised and Alternative Standardised Approaches for Operational
                  Risk issued on 19 April 2007.


7.4      Statutory and Liquidity Requirements5
         (i)      The SPI licensed institutions are required to observe separate compliance
                  for the statutory reserve requirement and the new liquidity framework for the
                  Islamic banking portfolio.


         (ii)     Bank Negara Malaysia requires the submission of the SPI licensed
                  institution’s maturity mismatch profile as at end of each month. The
                  submission must reach Bank Negara Malaysia not later than 10 days after
                  the reporting date. Pending the incorporation of the reporting requirement
                  on the new liquidity framework into the Financial Institutions Statistical
                  System (FISS), SPI licensed institutions are required to submit the
                  compliance report on the new liquidity framework for the Islamic banking
                  portfolio not later than ten days after the end of each month to Pengarah,
                  Jabatan Perbankan Islam dan Takaful.




4    Effective 2 January 2002, SPI licensed institutions are required to comply with new capital adequacy
     requirements as per the circular issued by Bank Negara Malaysia on “Pematuhan Nisbah Berwajaran Risiko
     bagi Portfolio Perbankan Islam” dated 19 November 2001.
5   The SPI licensed banks are required to comply with the new statutory and liquidity requirements with effect from
    3 January 2006 as per circular issued by Bank Negara Malaysia on Measures to Further Strengthen Islamic
    Banking Operations dated 11 November 2005.
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                           Takaful Department           Islam                                     12/23



7.5      Compliance with Single Customer Credit Limit6
         The SPI licensed institutions are required to observe the single customer credit limit
         for new financing facilities based on the IBF of the Islamic banking portfolio.


7.6      Framework of Rate of Return
         The SPI licensed institutions are required to observe the guidelines on “Framework
         of Rate of Return” issued by Bank Negara Malaysia on 10 August 2004.


7.7      Placement of Conventional Deposits
        (i)      In the event of shortage of funds, the SPI licensed institution may place its
                 conventional deposits in the IBF in the form of Special Investment Deposits.
                 Such deposits shall be placed under the contract of Mudharabah with the
                 condition that the SPI licensed institution has exhausted all avenues to obtain
                 additional funds from the Islamic inter-bank money market. Notification to
                 Bank Negara Malaysia must be carried out prior to any transfer; and
                 placement of the fund must be reported in the monthly report to Bank Negara
                 Malaysia.


        (ii)     The placement shall be carried out in the following manner:
                 (a)      The purpose of the transfer is to meet the SPI’s financing needs;
                 (b)      The amount transferred should not be less than RM1 million; and
                 (c)      The investment period should not be less than six months.




6   The SPI licensed institutions are required to comply with Single Customer Credit Limit with effect from 3
    January 2006 as per circular issued by Bank Negara Malaysia on Measures to Further Strengthen Islamic
    Banking Operations dated 11 November 2005.
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                             Takaful Department            Islam                                       13/23



7.8      Physical Set-up
         The SPI licensed institutions are required to display the word “SKIM
         PERBANKAN ISLAM” and the Islamic banking logo7 at its premises that offer
         Islamic banking products and services. The logo should also be displayed on all
         documents related to Islamic banking products and services, such as saving books,
         brochures, pamphlets, application forms for opening of account and financing and
         other related documents, where necessary. Please refer to Appendix IV for the
         details of the logo.


7.9       Product Application and Approval
          The SPI licensed institutions are required to observe the “Guidelines on New
          Product Approval Requirements for Islamic Banking Institutions” issued by Bank
          Negara Malaysia on 23 December 2003.


7.10     Documentation
          All documents (including ledgers, registers, pay-in-slips, cheques, receipts and
          passbooks) used for SPI operation must be appropriately marked, so as to easily
          distinguish them from the other documents of the banks. The abbreviation on
          Shariah concept shall be prominently marked on all application forms and other
          related stationery / documents in distinctive colour, if possible.


7.11     Takaful Coverage8
         (i)      The banking facilities offered under the SPI should be adequately insured,
                  where necessary, against possible risks. SPI licensed institutions are
                  required to offer Takaful plan as a first choice to customers who apply to
                  obtain Islamic financing which require coverage. If the customers reject the
                  Takaful plan or Takaful plan is not available in the market, the Islamic
                  licensed institutions can offer insurance coverage to the customers.


7   The Islamic financial institutions were required to use the Islamic banking logo as per the circular issued by
    Bank Negara Malaysia on “ Logo Perbankan Islam” dated 20 September 2001.

8   As per the circular issued by Bank Negara Malaysia on “Perlindungan Takaful bagi Pembiayaan Secara Islam”
    dated 21 October 2004.
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                      Takaful Department      Islam                               14/23




       (ii)   Only Takaful plan shall be used, if the coverage forms part of the Islamic
              financing package. SPI licensed institution is not allowed to include the
              premium of conventional insurance as part of the Islamic financing package.
              However, customers are allowed to take conventional insurance coverage
              for their Islamic financing provided that the insurance was obtained from
              other sources and does not form part of the Islamic financing package.
              Thus, the SPI licensed institutions must ensure that the Islamic financing
              package can be offered separately for this purpose.


7.12   Shariah Committee
       The SPI licensed institutions are required to observe the GPS-i, “Guidelines on the
       Governance of Shariah Committee for Islamic Financial Institution” issued by Bank
       Negara Malaysia on 15 December 2004.


7.13   System and Control
       The SPI licensed institutions must ensure the system and control as well as internal
       auditing of the SPI operations are in placed to ensure the smoothness of SPI
       operations.
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                           Takaful Department          Islam                                     15/23




SOURCES OF FUNDS OF SPI LICENSED INSTITUTIONS


8.1      The SPI commercial banks are allowed to offer the following deposit products:
         (i)     Current account deposits;
         (ii)    Savings account deposits;
         (iii)   Investment account deposits that comprises:
                 (a)     General investment deposits; and
                 (b)     Specific investment deposits.


8.2      The SPI investment banks are allowed to accept only investment account deposits
         and short-term deposits (for example call money deposits, overnight funds and
         Islamic repo) from customers. Deposits accepted by the SPI investment banks are
         subject to a minimum deposit threshold of RM500,0009


8.3      Funds received through the above accounts must be utilised in modes of financing/
         investments permissible by Shariah.


INVESTMENT ACTIVITIES OF SPI LICENSED INSTITUTIONS


9.1      The Islamic financial instruments that can be invested by SPI licensed institutions
        include the Government, Bank Negara Malaysia and corporate sukuks, money
        market instruments and other capital market instruments.


9.2      Investment in Shares10 by SPI licensed institution would be subject to the provisions
        of the Guidelines on Investment in Shares and Interest-in-Shares issued by Bank
        Negara Malaysia.




9   Circular on Acceptance of Deposits by Investment Banks issued on 8 May 2007.

10 As per the circular issued by Bank Negara Malaysia on “Guidelines on Investment in Shares and Interest-
    in-Shares”dated 12 February 2007.
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ACCOUNTING, FINANCIAL DISCLOSURES AND REPORTING


10.1   SPI licensed institutions are required to disclose separate balance sheet and
       income statement, cash flow statement and statement of changes in equity in the
       notes to the financial statements of the principal financial statements.


10.2   SPI licensed institutions are required to devise a separate system of accounting
       entries and maintenance of records for all transactions and to prepare a separate
       daily trial balance of the operations of the SPI. The SPI licensed institutions must be
       able to know the daily balances of their assets and liabilities which relate to SPI
       operations. The licensed institution must introduce specific account codes for all
       ledgers for Islamic banking business to ensure proper accountability of the funds
       and accounts.


10.3   For the purpose of transparency and disclosure of SPI operations, the SPI licensed
       institutions are required to observe the Guidelines on Financial Reporting for
       Licensed Financial Institutions (GP8).


SYSTEM AND CLEARING NETWORK OF SPI LICENSED INSTITUTIONS


11.1   Real - Time Electronic Transfer of Funds and Securities System (RENTAS)
       (i)    To participate in the RENTAS system for its SPI operations, the SPI
              licensed institutions are required to submit an application to Bank Negara
              Malaysia, (for attention: Pengarah, Jabatan Dasar Sistem Pembayaran)
              This is to facilitate smooth and organized trading of scripless securities and
              funds transfer on Islamic banking principles, where the SPI licensed
              institutions are required to segregate the IFTS and SSTS accounts from the
              conventional IFTS and SSTS accounts.


       (ii)   In order to separate the SPI accounts from the conventional accounts, the
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               SPI licensed institution is required to open an Islamic SPI current account at
               Bank Negara Malaysia. Application should be submitted to Pengarah,
               Jabatan Pengurusan dan Operasi Matawang, indicating the purpose of the
               account, list of authorized signatories and Board Resolution /Power of
               Attorney. Further details relating to the procedures on the application to
               participate in RENTAS system may be referred to the Unit RENTAS,
               Jabatan Dasar Sistem Pembayaran Bank Negara Malaysia.


       (iii)   The IBD shall be exempted from the yearly membership subscription fee of
               RM5,000 if the SPI licensed institution is already a member of RENTAS.


11.2   Cheque Clearing System (applicable to commercial banks only)
       (i)     The SPI commercial banks are also required to open separate clearing
               accounts at Bank Negara Malaysia branches for its Islamic banking
               transactions. Once the clearing accounts are opened, the bank shall inform
               Bank Negara Malaysia in writing, and the letter duly signed by the authorized
               signatories of the account holder on the commencement date, and
               afterwhich Bank Negara Malaysia will assign separate state codes for
               cheques issued under SPI.


       (iv)    To facilitate efficient sorting of cheques between SPI cheques and
               conventional cheques at manual cheque clearing centres, the colours of the
               SPI cheques must be green-shaded.


11.3   Settlement of Net Clearing and Unpaid Items
       (i)     The SPI commercial banks should note the following arrangements:

               a)     The consolidated balance of each licensed institution’s clearing
                      position (Conventional and SPI) will be available through RENTAS
                      system at midnight,

               b)     Funds due from the surplus of Net Clearing position (including
                      compensation) may only be used after settlement of Net Clearing
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                     figures.


      (ii)    Bank Negara Malaysia will monitor the current accounts of each SPI
              commercial bank to ensure that the SPI commercial bank adhere to the
              stipulated deadlines for funding of accounts to facilitate timely settlement of
              the clearing differences, UPI allotments redemptions, profit payments etc.
              Penalties may be imposed on the SPI commercial bank which fails to
              comply with the requirements.


      (iii)   The SPI commercial banks are required to give Day 1 value for cheques and
              other items deposited by their customers before they are sent for clearing at
              SPICK. Withdrawal of cash against these items, however, will be permitted
              only after the fate is known.

              (a)    For the purpose of pledge, the amount of GIIs to be deposited with
                     Bank Negara Malaysia by each SPI commercial bank will be
                     determined by Bank Negara Malaysia on a case by case basis;

              (b)    The financing by Bank Negara Malaysia to the SPI commercial banks
                     will be automatically repaid on the following business day that is. on
                     day 2 through a debit against the SPI commercial banks’ clearing
                     account with Bank Negara Malaysia; and

              (c)    If the SPI commercial banks borrow from Bank Negara Malaysia
                     more than 3 times in a calendar month, a penalty of RM1,000 will be
                     charged by Bank Negara Malaysia on the bank.
                               Islamic Banking and            Guidelines on Skim Perbankan                 Page
    BNM/RH/GL 001-27
                               Takaful Department             Islam                                        19/23

    APPENDIX I:                Scope of Business Activities of the SPI Licensed Institutions

               SPI Commercial Banks                                             SPI Investment Banks

    Approved business:
·   Receiving deposits on savings accounts,                       ·    Receiving deposits on investment
    current accounts, investment accounts or                           accounts and short-term deposit
    other similar accounts.                                            accounts (for example call money
                                                                       deposits, overnight funds and Islamic
                                                                       repo) – subject to a minimum deposit
                                                                       threshold of RM500,00011
·   Paying collecting cheques drawn by or
    paid in by customers.
·   Domestic commercial bank – Business of
    hire purchase and leasing activities.
·   Locally incorporated foreign bank –
    Industrial hire purchase for industrial
    equipment and heavy machinery of not
    less than RM200,000.
·   Business of consultancy and advisory                           · Business of consultancy and advisory
    services relating to corporate and                               services relating to corporate and
    investment matters.                                              investment matters.
·   Business of making or managing                                 · Business of making or managing
    investment on behalf of any persons.                             investment on behalf of any persons.
·   Provision of finance12                                         · Provision of finance – bridging
                                                                     financing.
·   Provision of financial guarantee to any                        · Provision of financial guarantee to any
    persons.                                                         persons.
·   Dealing in foreign currencies and gold.                        · Dealing in foreign currencies.
·   Money remittance services.
·   Agents for unit trust or property trust,
    credit cards-i and takaful.
·   Factoring business
·   Provision of safe deposit box facilities.

·   Intermediation role for example payment
    intermediation.


    11 Circulars on Acceptance of Deposits by Investment Banks issued on 8 May 2007.

    12 Includes financing, leasing business, factoring business, purchase of bills of exchange, promissory notes,
       certificates of deposits, debentures or other negotiable instruments, the acceptance or guarantee of any liability
       or duty of any person in accordance with Shariah principles.
                         Islamic Banking and     Guidelines on Skim Perbankan      Page
    BNM/RH/GL 001-27
                         Takaful Department      Islam                             20/23

            SPI Commercial Banks                             SPI Investment Banks
·   Such other business as the Bank Negara         ·   Such other business as the Bank
    Malaysia with the approval of the Minister         Negara Malaysia with the approval of
    prescribe                                          the Minister prescribe
    Prohibited Activities:
· Any business that does not comply with           · Any business that does not comply
  Shariah.                                           with Shariah.
· Underwriting of equities.                        · All other activities not prescribed as
                                                     Merchant Bank Business.
                   Islamic Banking and   Guidelines on Skim Perbankan   Page
BNM/RH/GL 001-27
                   Takaful Department    Islam                          21/23
                    Islamic Banking and   Guidelines on Skim Perbankan      Page
BNM/RH/GL 001-27
                    Takaful Department    Islam                             22/23

APPENDIX II:       List of Superseded Guidelines/ Circulars


                                                              Issuance Date


1.    Guidelines on “Skim Perbankan Tanpa Faedah”             1 July 1993
      for Commercial Banks
2.    Guidelines on “Skim Perbankan Tanpa Faedah”             1 July 1993
      for Merchant Banks
3.    Implementation of “Skim Perbankan Tanpa Faedah”         13 September 1993
4.    Langkah-langkah Pengukuhan Perbankan Islam              12 November 1998
5.    Skim Perbankan Islam untuk Syarikat-syarikat Diskaun    31 December 1998
6.    Pematuhan Nisbah Berwajaran Rsiko bagi Portfolio        19 November 2001
      Perbankan Islam
7.    Measures to Further Strengthen Islamic Banking          11 November 2005
      Operations
                          Islamic Banking and      Guidelines on Skim Perbankan          Page
BNM/RH/GL 001-27
                          Takaful Department       Islam                                 23/23

Appendix III:            Reallocation of Capital




    SPI            Core Capital*            Capital Base*                       RWCR*
 licensed                     Islamic                  Islamic                          Islamic
                Consol.                  Consol.                    Consol.
institution                  Banking                  Banking                        Banking
Bank A        4,486,457       88,397    4,654,908     103,897     37,116,017         2,154,049
Bank B        1,705,427       31,945    2,287,416      56,445     17,354,366         1,809,459

Bank C          290,026       6,211      318,064       8,219       2,012,535            144,062
                                                                   Required
                     CCR (%)                    RWCR (%)                             Required
                                                                  reallocation
                                                                                   reallocation to
                                                                    to IBF to
                                                                                   IBF to comply
                              Islamic                  Islamic    comply with
                Consol.                  Consol.                                     with min.
                             Banking                  Banking     min. CCR of
                                                                                   RWCR of 8%*
                                                                      4%*

Bank A           12.08         4.10       12.54         4.82            -               68,427

Bank B           9.82          1.77       13.18         3.12        40,433              88,312
Bank C           14.41         4.31       15.80         5.71            -                3,306

Notes:
    * Figures are in RM’000
    ** Consol. refers to consolidated figures
                     Islamic Banking and        Guidelines on Skim Perbankan      Page
BNM/RH/GL 001-27
                     Takaful Department         Islam                             24/23



APPENDIX IV:        Islamic Banking Logo




Specification:


(i)    Colour

       (a)   Blue colour as the background as well as the shape of the outer logo. The
             wordings under the logo are also in blue.

       (b)   The white colour is to shape the inner logo and the Arabic word “Pa” and
             “Alif” which can also be read as the alphabet “P” and “I”


(ii)   Logo size and wordings


       (a)   Logo – for the logo that is displayed within the head office and branches, the
             minimum size used shall be 7” x 6.5”.           For the logo printed on the
             documents, such as cheque books and saving account books, the size can
             be modified to follow the size of the documents; and


       (b)   Wordings – The words “PERBANKAN ISLAM” shall be in capital letters
             with font “Calligrapher” and size of 60 point. For the States that require the
             licensed institutions to use the Arabic words on all their display board, the
             font shall be in “Kufi” version.
                   Islamic Banking and   Guidelines on Skim Perbankan   Page
BNM/RH/GL 001-27
                   Takaful Department    Islam                          25/23

				
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